Trump’s move also offsets a Monday win for carmakers when European Commission President Ursula von der Leyen announced leniency on this year’s EU emission targets, which the industry said would have cost billions.
For years, German carmakers have used Mexico as a low-cost production hub. The country was “the perfect destination to produce cars” thanks to its trade deals with the U.S. — as well as with Latin America, Europe and the Middle East, said Felipe Munoz, an auto analyst at JATO.
Policymakers in the European Union, aware of Mexico’s vital role in the global automotive supply chain, attempted to shield carmakers from some of Trump’s threats by overhauling the bloc’s trade agreement with Mexico in January, giving European vehicle manufacturers favorable export rates into the country.
VW subsidiary Audi produces its Q5 SUV in Mexico for the U.S. and all other markets outside of China. The model was the brand’s top-selling car in 2023.
But Trump’s tariffs undercut that strategy.
“Having invested millions in a plant to manufacture the Q5 in Mexico, primarily for the U.S., just one decade ago, that facility all of a sudden looks like a white elephant investment,” said Matthias Schmidt, a European auto analyst.
